Obama Budget: Better Never Than Late

President's BudgetBy NALC President Fredric Rolando

April 10, 2013 —The Obama administration released its proposed budget for Fiscal Year 2014 today, months late and weeks after the House and Senate both passed budget resolutions—a fact that makes the president’s proposals less relevant than usual.

Nevertheless, NALC is disappointed that the president has revived a number of postal and federal employee provisions that he first proposed in 2011 to entice Republicans in the House to negotiate a so-called “grand bargain” to reduce the federal budget deficit.

Once again, the administration supports in a deficit reduction plan the elimination of Saturday mail delivery, starting in June 2013—even though the Postal Service receives no taxpayer funds.

Once again, the administration has proposed to increase the Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) contributions of current postal employees—by 0.4 percent per year for three years—and to eliminate the FERS Social Security supplement for new employees, despite the fact that the postal pension accounts in the Civil Service Retirement and Disability Fund are fully funded.

Worse, President Obama inserted into his budget one of the worst proposals he made during last year’s “fiscal cliff” talks with Speaker of the House John Boehner: a proposal to cut CSRS, FERS and Social Security benefits by calculating cost-of-living adjustments with a less generous version of the Consumer Price Index (the so-called “chained” CPI). This proposal would add insult to injury for federal and postal employees by further reducing their benefits, and cut Social Security benefits even though such benefits do not have an impact on the current budget deficit.

NALC President Fredric Rolando issued the following statement on the 2014 Obama budget:

NALC and its members are dismayed by many of the proposals in President Obama’s budget. The fact that these proposals are not new or that they are intended to coax Republicans in Congress into negotiations over a balanced plan to reduce the deficit does not lessen our disappointment.

The increase in pension contributions for federal and postal employees hired before 2013 would effectively cut the pay of such federal and postal employees pay by 1.2 percent by 2016 for benefits that would be reduced even further with a switch to a chained CPI.

Cutting Social Security benefits is inexcusable when the benefits are already quite low for the majority of Americans who derive most of their retirement income from the program. Given that a growing percentage of Americans have no private pension coverage at all, cutting Social Security is the last thing we should do.

Slashing letter carrier jobs and weakening the Postal Service by eliminating Saturday delivery while reducing the quality of service for our customers, instead of ending the retiree health pre-funding mandate altogether, is plain wrong—especially at a time of high unemployment.

We acknowledge that the president’s plan also includes a number of positive postal reform ideas, which also have been offered in the past. These include:

  • short-term relief on the pre-funding of future retiree health benefits, the cost of which accounts for 90 percent of the Postal Service’s loss so far this year;
  • a return of the postal surplus in FERS after measuring it more accurately;
  • new commercial freedom for the Postal Service to serve state and local governments;
  • and a one-time postage increase.

Unfortunately, these ideas fall far short of the needed fundamental reform of the Postal Service’s structure, governance system, and business model, and funding provisions for retiree benefits.

The Speaker of the House has already said that he will not support in this year’s budget talks any measures that increase taxes on the wealthy or that close the tax loopholes that benefit corporate insiders and the rich. So the President’s budget strategy has already failed.

In fact, President Obama’s budget does call for major tax reform to close tax loopholes and to increase the revenue collected from wealthy Americans and corporations that make use of such loopholes. It also offers a number of sensible Medicare reforms that attack the most important driver of deficit spending. As such, it is far superior to the radical budget adopted by House Republicans. But the budget proposals offered by Senate Democrats offer the best approach by emphasizing job creation and fairness to the middle class.

An NALC Fact Sheet on President Obama’s budget will be posted here shortly.

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